It’s not a sham! Acorda fends off Apotex in Zanaflex® antitrust, advertising suit

Apotex Inc. failed to demonstrate that a citizen petition filed by Acorda Therapeutics, Inc. for generic versions of a drug used to treat spasticity constituted a sham filing, nor did Acorda’s promotional advertising constitute false advertising. A Second Circuit appellate panel affirmed a lower court decision in favor of Acorda regarding Sherman Act and Lanham Act claims. Apotex’s appeal concerned two distinct questions: the circumstances under which the filing of a citizen petition with the FDA provides grounds for an antitrust claim, and the scope of false advertising liability under the Lanham Act (Apotex Inc. v. Acorda Therapeutics, Inc., May 16, 2016, Jacobs, D.).

Background. Acorda and Apotex are rival manufacturers of tizanidine, a drug for treating spasticity, a symptom of multiple sclerosis and Parkinson’s disease. Tizanidine tablets were first marketed in the United States by Elan Pharmaceuticals, Inc. under the trade name “Zanaflex®;” Elan subsequently sold Zanaflex rights to Acorda.

During its review of new drug application (NDA) for Zanaflex, the FDA concluded that the absorption of the drug was delayed when tizanidine capsules were taken with food (rather than without), and that the delay was associated with a mean 20 percent decrease in the peak amount of the drug in a subject’s bloodstream. Importantly, the FDA found that “[w]hen bioequivalence of the capsule relative to the tablet is examined under fed conditions [i.e., with food], there is a delay in absorption and the mean Cmax for the capsule is approximately 2/3 of the mean Cmax for the tablet.” In essence, the faster the drug is absorbed, the drowsier the patient may become, whereas the side effect may be reduced if absorption is slowed.

In 2007, Apotex filed an abbreviated new drug application (ANDA) to sell generic tizanidine capsules in direct competition to Acorda’s Zanaflex Capsules. A district court ruled the Acorda patent invalid for infringement purposes and soon after the decision, Acorda filed a citizen petition with the FDA raising problems with Apotex’s ANDA. A citizen petition allows concerns to be raised about products the FDA reviews; any individual may file such a petition concerning scientific or legal issues before or while the product is on the market (21 C.F.R. sec. 10.30). The FDA denied Acorda’s citizen petition on February 3, 2012. That same day, the FDA approved Apotex’s ANDA.

In turn, Apotex filed suit in district court and alleged that Acorda (1) filed a sham citizen petition with the FDA to hinder approval of Apotex’s competing formulation in violation of Section Two of the Sherman Act (15 U.S.C. §2); and (2) violated the Lanham Act’s (15 U.S.C. §1501) proscription on false advertising. A lower court found that that the simultaneous FDA approval of Apotex’s drug application and denial of Acorda’s citizen petition (raising concerns about the application) was by itself insufficient to support a Sherman Act claim. A separate decision granted summary judgment and dismissed all of Apotex’s false advertising claims on the grounds that no representation was literally false or likely to mislead consumers.

Sherman Act—citizen petition. The appellate panel stated that while precedent supported an inference that a citizen petition could be used as an anticompetitive weapon if it attacked a rival drug application and was denied on the same day that the application was approved, the inference had been undercut by a 2014 FDA guidance. The guidance explains: “If a petition requests that the Agency take an action related to a specific aspect of a pending application, we will consider the review status of the affected application(s) in determining whether it would be appropriate for the Agency to respond to the request to take the action requested in the petition within the 180-day timeframe.” The FDA stated, however, that it was preferable not to issue a decision on a citizen petition until it issued a decision on the corresponding ANDA application. As such, the guidance favored a contemporaneous adjudication to safeguard the procedural rights of ANDA applicants such as Apotex.

The appellate panel noted that Apotex pleaded no other facts to plausibly infer that Acorda’s petition was a sham. Apotex alleged during the patent trial that Acorda falsely mischaracterized testimony and scientific evidence relating to the bioequivalence of Apotex’s product. But that allegation only demonstrated that Apotex disagreed with the arguments Acorda advanced in its citizen petition, not that the Acorda citizen petition was a sham. The district court’s decision was affirmed.

Lanham Act—false advertising. As to false advertising, the appellate panel agreed with the district court that no reasonable jury could have found that Acorda made literally false or misleading representations in its advertisements, with the exception of a single representation that Apotex has failed to show affected decisions to purchase. Under the Lanham Act, false advertising claims based on 15 U.S.C. §1125(a)(1) must show falsity based on “literal” falseness (on its face) or implicitly by misleading consumers. Falsity alone, however, does not make a false advertising claim viable; it must also be demonstrated that the false or misleading representation involved an inherent or material quality of the product.

The appellate court noted that a majority of Apotex’s claims attacked Acorda’s representations as inconsistent with the FDA-approved label for Zanaflex Capsules. In recognizing lower court decisions within the circuit, the appellate court held that representations commensurate with information in an FDA label generally cannot form the basis for Lanham Act liability. By adopting this interpretation, the panel noted it reflected proper “deference to the expertise” of the FDA as the regulatory agency responsible for issuing the label by respecting the exhaustive process preceding the issuance of a label.

Apotex had specifically objected to representations that Zanaflex Capsules provided more flexibility than the tablet, a point on which the FDA had remained silent. However, statements that Zanaflex Capsules reduce Cmax when taken with food are fully consistent with the FDA label, as the district court correctly found, and Lanham Act liability therefore cannot attach to these statements. It was not enough to show that Acorda made representations absent from the FDA label; instead, Apotex needed to demonstrate that these comments were inconsistent with the FDA label in a manner sufficient to support a false advertising claim.

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